From left to right: Shree Baboo Chekitan Servansing, Hong Zhao, Peter Van den Bossche, Ujal Singh Bhatia, Thomas R. Graham and Ricardo RamÃrez-Hernández.
Image Source: www.wto.org
On the eve of WTO’s 15th “birthday”, it’s dispute settlement mechanism
reached the milestone of having the 400th trade dispute brought before it since
its inception. To mark the occasion the then Director-General of WTO Pascal Lamy
said that, “The dispute settlement system is widely considered to be the jewel
in the crown of the WTO,”.[1]
There was that day; and contrary to that today is the day; where WTO’s Dispute
Settlement Body [‘DSB’ hereinafter] for the straight nine months seems to be
struggling with appointment to its seven-member appellate body, which was the
finest cut to that crown jewel.
In latest of the many attempts; at the last meeting of the DSB on 27th April2018[2];
more than 35 WTO Members including India, China and European Union citing
“Given the urgency and importance of filling the vacancies in the Appellate
Body, in compliance with the DSU and so that it can carry on its functions
properly”, have proposed to launch the selection process for appointment of
three AB members, to establish selection committee and set deadline of 30 days
period to arrive at the decision. The vacancy created due to USA’s blockade
have brought down the no of members at Appellate Body [‘AB’ hereinafter] to the
mere four Members and therefore the sort of existential crisis for the WTO.
Wherein Article 17 of the Understanding on Rules and Procedures Governing theSettlement of Disputes [‘DSU’ hereinafter] mandates AB to be seven-member body.
The biggest advocate of the Appellate system during Uruguay Round
Negotiations, United States of America has suddenly realized that, “The WTO is
losing its essential focus on negotiation and becoming a litigation-centered
organization”, USTR Mr. Robert Lighthizer said at Buenos Aires MinisterialConference last December. He also said that, “Too often members seem to believe
they can gain concessions through lawsuits that they could never get at the
negotiating table.”. As more than 20 years of time has lapsed, the dispute
settlement process of the WTO has definitely provided utmost security and
predictability to the world trading system. But at the same time USA is trying
to blame this system being flawed as it had unfairly punished the US for
expecting to play fairly, while countries like China exploiting every tool
provided by the WTO to gain unfair advantage. USTR therefore has also stated
that, “There is something wrong, in our view, when five of the six richest
countries in the world presently claim developing country status.”[3]
The Single Undertaking nature of the WTO and reverse consensus system of
the automatic time-bound dispute settlement was very unique in its self and was
new to every country back then, as it was slightly deviated from the
traditional approach to the settlement of disputes between states, which has
always recognized the country’s sovereignty. However, Article XVI:4[4]
of the Marrakesh Agreement Establishing the WTO also mandates all the members
to ensure the conformity of its laws, regulations and administrative procedures
with its obligations as provided in the annexed Agreements.
It is very much important for the WTO members to find solutions over an
impasse in Geneva. If AB comes down to three or less than three members, it
would be impossible for AB to formally operate. While the USA’s allegations
over legitimacy problems related to bunch of disputed dealt by AB typically
involving trade remedies, is completely different aspect altogether to examine.
On the other hand, USA’s arguments on systemic concerns related to departing
Members of the Appellate Body working on ongoing cases even after finishing
their respective terms does not seem that unreasonable.
But there must be a solution to this impasse. Article
25 of the DSU[5] can be resorted to as
emergency means of settling the dispute, but the arbitration can not
practically replace the AB system. The further Negotiations on achieving a
compromise between USA and rest of the members is the only way out, and
historically speaking this method of dialog has been pumping the life and
energy into WTO’s very existence. The paramount priority must be to ensure the
survival of the WTO.
[2]WTO Events Calender, Dispute Settlement Body — Formal Meeting 27th April 2018 https://www.wto.org/english/news_e/events_e/events_e.htm#mon05
[3] US, India spar over developing country status at WTO, Business Line, December
12, 2017 https://www.thehindubusinessline.com/economy/us-india-spar-over-developing-country-status-at-wto/article9990278.ece
[4] Article XVI:4: Each Member shall
ensure the conformity of its laws, regulations and administrative procedures with
its obligations as provided in the annexed Agreements. https://www.wto.org/english/docs_e/legal_e/04-wto.pdf
[5] Article 25:1 of the DSU: Expeditious arbitration within the WTO as an alternative means of
dispute settlement can facilitate the solution of certain disputes that concern
issues that are clearly defined by both parties. https://www.wto.org/english/docs_e/legal_e/28-dsu.pdf
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